Calif. expects $31B from federal stimulus program

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SACRAMENTO 
California is in line to receive at least $31.5 billion in federal stimulus funding, much of which will help plug budget shortfalls to education and other programs, state officials reported Tuesday.

Billions more will be available through competitive grants that Schwarzenegger administration officials say they will pursue aggressively. Landing additional grant money would push California's total closer to $50 billion, administration officials said.

The nonpartisan Legislative Analyst's Office released the first official rundown of the money California is expected to receive from the $787 billion stimulus bill.

Most of the money will be used to fill gaps in education and health care programs. California also will get help with housing, welfare and unemployment programs. About 8 percent of the total will fund transportation projects.

Legislative Analyst Mac Taylor urged lawmakers to begin using the federal money to start highway and road projects that have been stalled by the state's budget crisis and the frozen credit markets that have prevented the state from borrowing money. He also urged them to act quickly to draw as much Medicaid funding as possible.

He warned lawmakers against using the money for ongoing programs because the stimulus funding should be considered a one-time infusion of cash. State revenue also is likely to fall below even the most conservative estimates, he said.

"The Legislature will need to take many actions in the coming months to ensure that the funds are used in ways that meet its priorities and preferences," Taylor wrote in the analysis by his office.

The report said about $8 billion would help the state avoid cuts to education funding, minimizing the number of teacher layoffs. Schools are required to notify staff by March 15 that they could be laid off for the 2009-2010 school year, and the California Teachers Association estimates that 20,000 pink slips have already gone out.

The state and local governments could receive $10 billion over the next two fiscal years for Medicaid, known as Medi-Cal in California, to provide health insurance for the poor. The state also could get $5.4 billion to extend and increase unemployment benefits by $25 per week.

California expects to receive $2.6 billion for highways and roads from the transportation component of the stimulus plan. The state also could get an extra $1 billion for bus and rail systems.

State officials already are receiving suggestions about how to spend the money. In the wake of last year's Metrolink train crash that killed 25, the California Public Interest Research Group has recommended spending $22 million on a global-position device to prevent Los Angeles-area commuter trains from running into each other.

Schwarzenegger welcomed the federal government's help as the state economy continues to struggle and unemployment hits double digits.

Last month, Schwarzenegger signed a two-year budget package intended to close a $42 billion shortfall through June 30, 2010. The plan included a mix of spending cuts, tax hikes and borrowing, some of which will need voter approval in May.